Mind The Tax Gap

6 February 2009

Right, here’s your homework for the weekend. If you haven’t already, spend a bit of time ploughing through The Guardian’s fascinating examination of tax avoidance by UK-based companies.

As most of us were already aware, zillions of pounds are being squirreled away from the public purse by companies that we all use every single day, leading to us all having to shell out more from our own hard-earned wedge. Th Guardian features have named and shamed some of the guilty.

Highlights include…

How Barclays diverted £30m away from the Exchequer with the help of the Irish gas board.

Walkers Crisps and their Swiss tax haven.

How GlaxoSmithKline transferred more than 40 trademarks (and a shed-load of  tax liability) to Puerto Rico

Whisky Galore! Johnnie Walker and their secret Dutch subsidiaries.

TOPICS:   Banking


  • Amanda H.
    What about paypal? Did they move to Switzerland for the skiing?
  • Offshore D.
    Who cares? If you owned a company and there was a way for you to minimise your exposure to tax, would you ignore it? Those UK companies that you have shares in, do you think you'd get smaller or larger dividends if they were paying extra tax? Get a grip!
  • piracee
    This is totally ridiculous. Its legal and if you found a way to save money on paying tax then you would. If it was illegal or the gov weren't happy about it HMCE would take them to court or there would be new legislation about it. Agree with Offshore Daddy
  • miffed
    I think the point is, that if individuals did this sort of thing then you would be annoyed that they were basically cheating the system and paying less tax than you. Same goes for companies, why should they get out of paying massive amounts of tax that could be used to fund a lot of things in this country? The fact is a company like Tesco dodges enough tax each year to fund a hospital (alegedly) so are you really saying that you'd rather get a few extra quid from your shares but lose the country a hospital/school/etc. Wow, how wonderfully selfish of you. Ever thought of working for a large company? Mind you I guess a lot of UK based people put savings into Isle of Man Kaupthing to try and avoid a bit of UK tax. That worked well didn't it. Try to avoid some tax and then go crying to the government when they won't bail you out. Hahahaha. :D
  • Taxman
    Strange that the Guardian do not mention the tax avoidance measures that their Parent company employ in order to minimise their tax, in much the same ways the seem so outraged by.
  • Fred C.
    There is nothing much the governments can do about this so long as there is no harmonisation of tax and international law. The businesses operate on a global level but the law controlling them are all fragmented and inconsistent. These mega big companies are more powerful than governments and they are big enough to make an individual country solvent or insolvent or even bust. E.g. Kauthing. Besides the governments do like to have tax havens around. Just look at the tiny islands around the British Isles , there are full of British Empire created tax havens for the rich and then there are the British protectorates around the world like : Bermuda, Cayman Islands......The good news is that tax is for the benefit of the people services so ideally the people should be paying the taxes rather than businesses. The bottomline is that businesses employ people and therefore the biggest tax is made on income tax and VAT.
  • Mike
    • The UK-based drinks giant Diageo plc has transferred ownership of brands worth billions of pounds, including Johnnie Walker, J&B and Gilbey's gin, to a subsidiary in the Netherlands where profits accrued virtually tax-free. Despite average profits of £2bn a year, it paid an average of £43m a year in UK tax - little more than 2% of its overall profits. • Two major drug firms have shifted ownership of their brands to tax havens in the Caribbean. Their UK operations can then be made to pay royalties for the use of the trademarks, reducing their profits and the amount of tax due in this country. • An internationally renowned corporation has structured itself so that it is now simultaneously a British public company, tax-resident in Amsterdam, but whose brands are Swiss-owned. • The makers of an iconic British food product have shifted the rights in it to a tax haven in Switzerland. • A household name has been deliberately loaded with debt so that it no longer has any profits to pay tax on. • Top accountancy firms are charging £500,000 a time to invent tax-avoidance schemes. • Some UK-listed companies which have moved control to Dublin to benefit from Ireland's low-tax regime appear to have little real presence there.
  • Smithy
    Per Guardian's 2008 accounts: - Profit before tax £306.4m - Tax £0.8m - Profit after tax £307.2m I have no doubt that they have paid pretty much the amount of tax that the legislation says is due. But with a 30% tax rate in the UK, as they would say, are they paying their fair share? Isn't this a bit of "cake" and "eat it"?
  • Cam19
    Why copy the articles and even the logo from the guardian's website? I just don't get it. Anyone can put up a blog and post links to other websites. You might as well create a directory of online media groups, that would pretty much do the same thing.
  • will
    Per Guardian’s 2008 accounts: - Profit before tax £306.4m - Tax £0.8m - Profit after tax £307.2m Im confused is the pre-tax not meant to be higher?
  • Smithy
    Normally yes. If you pay what the Guardian says is your fair share of tax then profit after tax is less. For example with a 30% tax rate you would expect £90m of tax on £300m of profits, giving profits after tax of £210m. I am sure that the Guardian has used some perfectly legal way of structuring itself to make sure it does not legally have to pay tax but, well, that's not what it's on about when it talks about companies paying their fair share of tax.
  • Amanda H.
    Some helpful tips here. So when I get my £200 a week from stacking shelves at Tesco. To avoid paying income tax, I shall fly via private jet to my main residence, a penthouse in Monaco. I should save £10-20 A WEEK! I guess I'll have to put up with that Philip Green next door, but hey. http://en.wikipedia.org/wiki/Philip_Green Under "Tax avoidance"
  • Bob-the-dodge
    Welcome to my world...IOM
  • Smithy
    I see that two comments on the Guardian's blog that criticised the tax avoidance policies of the Guardian have been "moderated". Which I guess is another word for censored. One comment talked about £600,000 of stamp duty that the Guardian avoided. Another talked about the trust that owns the Guardian being set up to avoid tax. As Google is my friend, I found this article that explains what it is all about: http://www.order-order.com/2009/02/tax-justice-protest-against-guardian.html
  • jaysexy212005
    Nothing new, many companies are moving abroad to cut costs/taxes. It's part of globalisation...
  • Triton B.
    Jaysexy212005> It's all great that the cash is going 'global' but when we try to source CDs/DVDs etc 'Globally' all hell breaks loose and companies who are based in the Channel Islands get taken to court.
  • janz70
    I love the way owners and MDs of companies see nothing round with defrauding the government of money but if somebody working class does the same (but on a minute scale) they take the moral high ground.
  • Liddle m.
    Monday morning 10:10. No new article on this site since Friday. Wake up guys! (And none of that nonsense about having a life, blah, blah). Your collective duty is to write interesting pieces for us to read - and to write them at regular intervals ;) p.s. It's a compliment.

What do you think?

Connect with Facebook, Twitter, or just enter your email to sign in and comment.

Your comment